Private debt’s role in financing growth and retirement savings

Private debt has grown significantly in recent years. How do you see it evolving?

At AIC, we believe private credit will remain a central pillar of debt financing in the US. This is especially true for small and medium-sized businesses, which are most in need of capital to grow, but it also extends to larger US corporations.

This growth is fueled by the relationships companies can build with private credit firms – relationships that go beyond capital to include deep sector expertise. Private credit is considered attractive because of its efficiency – the ability of borrowers and lenders to work together to come to a loan agreement without an intermediary, and with certainty of execution. It is also seen as attractive because of lenders’ willingness to work with borrowers when problems arise. Private credit managers are skilled at monitoring their portfolios and are quick to take proactive measures that preserve value for borrowers, lenders, and their investors. Add to that the macro trend of bank consolidation and the growing demand for flexible financing, and the case for private credit becomes even stronger.

Do you see direct lending as the dominant strategy, or will new niches emerge?

Yes, in the near future I expect direct lending to continue to be the largest subset of private credit, but other subsets of private credit are catching up. Private equity continues to have considerable dry powder, and market trends point to increasing activity in the sector, creating an opportunity to lend on those transactions. The majority of investors plan to either maintain current allocations to direct lending or increase allocations to this strategy. I will point out that demand for asset-based financing is increasing, especially as the AI race continues and the need for data centers increases.

Where else will future growth come from?

Our view is that private credit will continue to deploy more capital as market demand grows, namely the gaps left by traditional lenders. In terms of matching capital to that growing demand, Preqin’s most recent investor survey indicates that LPs will continue to at least maintain, or in the long term, increase their allocations to private debt in the years to come.

We also think that expanding access to 401(k)s offers a big opportunity – for retirees, workers, and savers to participate in this growing market. Both private credit and private equity are a big part of public pension asset allocation, securing the retirement of teachers, firefighters, and police officers in the US. For younger investors, private markets can provide growth; for those nearing retirement, they can offer diversification and stability.

On Main Street, there’s also a great opportunity. Access to capital remains a challenge for businesses of all sizes, but particularly small and medium-sized enterprises. The growth of private credit provides an additional source of financing for these businesses, particularly as banks have pulled back from certain lending activities. The median business supported by private credit employs approximately 182 employees. These are Main Street businesses across the country. So private credit has a role to play in the growth trajectory of Main Street businesses on one hand, and for the savers who work at those Main Street businesses on the other.

About
Will Dunham is the President and CEO of the American Investment Council (AIC). The AIC is an advocacy and resource organization established to develop and provide information about the private investment industry and its contributions to the long-term growth of the US economy and retirement security of American workers.

This article originally appeared in Private Credit in 2026.

_{This is a sponsored opinion by the American Investment Council (AIC). The views expressed are provided as of December 2025, do not constitute an endorsement, recommendation, or any other advice, and are subject to change. The content does not necessarily reflect the views of BlackRock, Preqin, or any of its affiliates. the American Investment Council (AIC) is not affiliated with Preqin. Preqin received compensation from the American Investment Council (AIC) in exchange for publishing this content.}